The US government announced an agreement with European states for the latter to withdraw their digital service taxes. The taxes will be phased out as the new system for taxing multinational profits, agreed earlier this month under OECD leadership, is introduced across the world.
The US had been threatening sanctions against Austria, France, Italy, Spain and the UK for their digital taxes that affect predominantly large American internet companies. The political compromise removes the threat of other industries suffering from the dispute.
The deal allows the European countries to leave the digital taxes in place until the new tax rules take effect. Any difference in the taxes collected and what would be due under the new rules in the first year may be credited to the companies following their final filings and calculations by tax authorities. The deadline for implementing the first phase is end-2023.
